UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
Danka Business Systems PLC
-------------------------------------------------------------
(Name of Issuer)
Ordinary Shares, nominal value 1.25 pence per share
-------------------------------------------------------------
(Title of Class of Securities)
23627710
(CUSIP Number)
James L. Singleton
The Cypress Group LLC
65 East 55th St., 19th Floor
New York, New York 10022
(212) 705-0150
with copies to:
Glenn M. Reiter, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
-------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 17, 1999
----------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box /_/.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
<PAGE>
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that
section of the Exchange Act but shall be subject to all other provisions of
the Exchange Act (however, see the Notes).
-2-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cypress Associates II LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 64,000,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
10 SHARED DISPOSITIVE POWER
64,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,000,000 *
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.497%
14 TYPE OF REPORTING PERSON
00
* The Reporting Person disclaims admission of such beneficial ownership as
described under Item 5.
-3-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cypress Merchant Banking Partners II L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 60,827,200
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 60,827,200
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
60,827,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.651%
14 TYPE OF REPORTING PERSON
PN
-4-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cypress Merchant Banking II C.V.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 2,585,920
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
2,585,920
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,585,920
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.094%
14 TYPE OF REPORTING PERSON
PN
-5-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
55th Street Partners II L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 586,880
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 586,880
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
586,880
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.250%
14 TYPE OF REPORTING PERSON
PN
-6-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James A. Stern
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 64,000,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
10 SHARED DISPOSITIVE POWER
64,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,000,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.497%
14 TYPE OF REPORTING PERSON
IN
* The Reporting Person disclaims admission of such beneficial ownership as
described under Item 5.
-7-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jeffrey P. Hughes
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 64,000,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
10 SHARED DISPOSITIVE POWER
64,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,000,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.497%
14 TYPE OF REPORTING PERSON
IN
* The Reporting Person disclaims admission of such beneficial ownership as
described under Item 5.
-8-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James L. Singleton
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 64,000,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
10 SHARED DISPOSITIVE POWER
64,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,000,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.497%
14 TYPE OF REPORTING PERSON
IN
* The Reporting Person disclaims admission of such beneficial ownership as
described under Item 5.
-9-
<PAGE>
SCHEDULE 13D
CUSIP No. 23627710
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David P. Spalding
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 64,000,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
10 SHARED DISPOSITIVE POWER
64,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,000,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.497%
14 TYPE OF REPORTING PERSON
IN
* The Reporting Person disclaims admission of such beneficial ownership as
described under Item 5.
-10-
<PAGE>
STATEMENT PURSUANT TO RULE 13d-1
OF THE GENERAL RULES AND REGULATIONS
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to the Ordinary Shares, nominal
value 1.25 pence per share (the "Ordinary Shares") of Danka Business Systems
PLC, a limited liability company organized under the laws of England and
Wales (the "Company"). The Ordinary Shares have been registered under the
Securities Exchange Act of 1934, as amended, in the form of American
Depositary Shares, each representing four Ordinary Shares. The principal
executive offices of the Company are located at 11201 Danka Circle North, St.
Petersburg, Florida 33716.
Item 2. Identity and Background.
This Schedule 13D is being filed jointly by Cypress Merchant Banking
Partners II L.P., a Delaware limited partnership ("Cypress MBP"), Cypress
Merchant Banking II C.V., a limited partnership organized under the laws of
The Netherlands ("Cypress MB"), 55th Street Partners II L.P., a Delaware
limited partnership ("55th Street", and together with Cypress MBP and Cypress
MB, the "Investors"), Cypress Associates II LLC., a Delaware limited
liability company ("Cypress Associates"), James A. Stern, Jeffrey P. Hughes,
James L. Singleton and David P. Spalding (Messrs. Stern, Hughes, Singleton
and Spalding, collectively, the "Members", and together with the Investors
and Cypress Associates, the "Reporting Persons").
Cypress MBP was formed in 1998 to invest in securities of entities
selected by its general partner. 55th Street was formed in 1999 to invest in
securities of entities selected by its general partner. Cypress MB was
formed in 1999 to invest in securities of entities selected by its managing
general partner. Cypress Associates is the general partner of Cypress MBP
and 55th Street and the managing general partner of Cypress MB. Pursuant to
the amended and restated limited partnership agreement of Cypress MBP, the
management, operation and policy of 55th Street is vested exclusively in
Cypress Associates. Pursuant to the amended and restated limited partnership
agreement of 55th Street, the management, operation and policy of Cypress MBP
is vested exclusively in Cypress Associates. Pursuant to the amended and
restated limited partnership agreement of Cypress MB, Cypress Associates is
vested with the right and power to manage and administer the affairs of
Cypress MB, including with respect to the investment of Cypress MB's funds
and the management and control of Cypress MB's portfolio investments.
-11-
<PAGE>
The business of Cypress Associates consists of performing the functions
of, and serving as, the general partner of Cypress MBP and 55th Street, and
the managing general partner of Cypress MB.
The Members are the managing members of Cypress Associates and are
affiliated with The Cypress Group LLC. Each of the Members is a United
States citizen.
The principal business and office address of Cypress Associates, Cypress
MBP, 55th Street, Cypress MB and the Members is 65 East 55th Street, 19th
Floor, New York, NY 10022. The principal business and office address of
Cypress MB in the Netherlands is Herengracht 548, 1017 CG Amsterdam, The
Netherlands.
During the last five years, none of the Reporting Persons has been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding has been or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations of
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The funds used in connection with the purchase by the Investors of the
Participating Shares (as defined in Item 4) consisted of US$200 million in
investment funds, which was obtained by the Investors from capital
commitments made by their partners.
Item 4. Purpose of Transaction.
On November 2, 1999, the Company entered into a Subscription Agreement
with the Investors (the "Subscription Agreement") for the purchase by the
Investors of US$200 million 6.50% Senior Convertible Participating Shares
(the "Participating Shares"), at a price of $1,000 per share, allocated as
follows: 190,085 Participating Shares allocated to Cypress MBP, 8,081
Participating Shares allocated to Cypress MB and 1,834 Participating Shares
allocated to 55th Street.
The interest of the Reporting Persons in the Company will increase as a
result of the payment, from time to time, of dividends on the Participating
Shares in the form of additional Participating Shares. See Item 6.
The Reporting Persons intend to review on a continuing basis their
investment in the Company, and the Reporting Persons may decide to increase
or decrease their investment in the Company depending upon the price and
-12-
<PAGE>
availability of the Company's securities, subsequent developments affecting
the Company, the Company's business and prospects, other investment and
business opportunities available to the Reporting Persons, general stock
market and economic conditions, tax considerations and other factors.
Other than as described above, none of the Reporting Persons have any
plans or proposals that relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D
(although they reserve the right to develop such plans).
Item 5. Interest in Securities of the Issuer.
(a) and (b). Pursuant to Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), Cypress MBP, Cypress MB and 55th
Street may be deemed to beneficially own 60,827,200, 2,585,920 and 586,880
Ordinary Shares, respectively, which are subject to issuance upon conversion
of the Participating Shares acquired in connection with the Participating
Shares Subscription.
Accordingly, the percentage of the outstanding Ordinary Shares
beneficially owned by each of Cypress MBP, Cypress MB and 55th Street is
20.651%, 1.094% and 0.250%, respectively.
Cypress Associates, the general partner of Cypress MBP and 55th Street
and managing general partner of Cypress MB, has the power to vote or to
direct the vote, and to dispose or to direct the disposition of, the
Participating Shares respectively owned by each of Cypress MBP, Cypress MB
and 55th Street. As a result, Cypress Associates may be deemed to
beneficially own the Participating Shares directly owned by the respective
entities of which it is the general partner or managing general partner, and
may be deemed to beneficially own the Ordinary Shares into which such
Participating Shares are convertible. The filing of this Schedule 13D shall
not be construed as an admission that Cypress Associates is a beneficial
owner of any securities covered by this statement.
Each of the Members, as a managing member of Cypress Associates, may be
deemed to beneficially own the Participating Shares beneficially owned by the
entities of which Cypress Associates is the general partner, and may be
deemed to beneficially own the Ordinary Shares into which such Participating
Shares are convertible. The filing of this Schedule 13D shall not be
construed as an admission that any of the Members is a beneficial owner of
any securities covered by this statement.
(c) To the best knowledge of each of the Reporting Persons, none of the
Reporting Persons has beneficial ownership of, or has engaged in any
transaction during the past 60 days in, any Ordinary Shares, except as
disclosed in this Schedule 13D.
-13-
<PAGE>
(d) No person, other than the Reporting Persons, has the right to
receive or the power to direct the receipt of dividends from, or the net
proceeds from the sale of, the Participating Shares, or the Ordinary Shares
into which such Participating Shares are convertible, referred to in this
Item 5.
(e) Not applicable.
Item 6. Contracts, Arrangements; Understandings or Relationships with
Respect to Securities of the Issuer.
On December 17, 1999, an extraordinary general meeting of shareholders
of the Company was held, at which the shareholders adopted resolutions
approving, among other things, new articles of association of the Company
which set forth the terms and conditions of the Participating Shares and
authorizing the Board of Directors of the Company to authorize and allot such
Participating Shares.
Subscription Agreement and Articles of Association
The Subscription Agreement (Exhibit 3 hereto) and the Amendment to
Subscription Agreement, dated as of December 16, 1999 (Exhibit 4 hereto),
are incorporated herein by reference. The new articles of association
(Exhibit A to Exhibit 6 hereto) are incorporated by reference
herein. The following summary is qualified in its entirety by reference
to the Subscription Agreement, the Amendment to Subscription Agreement
and the new articles of association.
The Participating Shares carry voting rights and are convertible into
Ordinary Shares. Each Participating Share is initially convertible into 320
Ordinary Shares based upon a conversion price of US$3.125 per Ordinary Share.
In addition, the Participating Shares have a preference over Ordinary Shares
as to dividends and upon liquidation. Pursuant to the new articles of
association of the Company, duly adopted by the shareholders of the Company
at an extraordinary meeting of shareholders held on December 17, 1999,
holders of the Participating Shares will be entitled to vote at general
meetings of the Company's shareholders. Each Participating Share will carry
so many votes as the number of Ordinary Shares into which it may convert,
except that the total voting rights for the Participating Shares held by The
Cypress Group LLC and its affiliates (including the Investors) may not exceed
29.99% of the total voting rights of shareholders.
Dividends on Participating Shares will be payable quarterly and equal
the greater of (a) an amount per annum equal to 6.50% of the liquidation
preference payable on that Participating Share and (b) the deemed per annum
rate of dividends, if any, declared on Ordinary Shares in that quarter.
Until the fifth anniversary of the issue of the Participating Shares,
-14-
<PAGE>
dividends on the Participating Shares will be paid in the form of additional
Participating Shares. From the fifth anniversary, dividends on the
Participating Shares will be payable in cash, unless the Company is
prohibited by law or under the terms of its then existing indebtedness, in
which case dividends on the Participating Shares will be paid in the form of
additional Participating Shares.
Appointment of Directors. Pursuant to the terms of the Participating
Shares as set forth in the new articles of association of the Company, the
holders of the Participating Shares will be entitled jointly to appoint two
directors to the Board of Directors, as long as such holders own voting
shares (including Participating Shares) of the Company that represent at
least 10% of the voting rights of the Company. In the event that such
holders own voting shares representing less than 10%, but more than 5%, of
the voting rights of the Company, such holders will be entitled to appoint
one director to the Board of Directors. In the event that The Cypress Group
LLC or its affiliates transfer some or all of the Participating Shares to a
person who is unaffiliated with the Investors without the consent of the
Board of Directors, and as a result of the transfer, The Cypress Group LLC
and its affiliates hold in the aggregate less than 50.01% of the total number
of Participating Shares, the holders of the Participating Shares will be
entitled in aggregate to appoint only one director to the Board of Directors.
Each committee of the Board of Directors will include at least one of the
directors appointed by the holders of Participating Shares, subject to
certain limitations to comply with applicable laws and regulations. Pursuant
to the Subscription Agreement, the Company expanded its Board of Directors
from 9 to 11 members as required under the new articles of association and
has appointed two individuals, James L. Singleton and Anthony D. Tutrone,
designated by the Investors as members of the Board of Directors.
If the Company fails to redeem any Participating Shares when obligated
to do so or, following the fifth anniversary of the initial date of issuance
of the Participating Shares, the Company fails to pay a cash dividend on the
Participating Shares for six consecutive quarters (regardless of whether the
Company has paid such dividends in the form of additional Participating
Shares) the holders of the Participating Shares will be entitled to appoint
an additional two directors to the Board of Directors for so long as the
Company is in default of its redemption obligations or until the Company will
have paid dividends in full in cash for four additional consecutive quarters.
Accordingly, the Board of Directors would be expanded from eleven to thirteen
members to accommodate these additional directors.
Effect of a Change of Control. In the event of a change in control,
holders of Participating Shares will have the right to redeem such
Participating Shares at a price equal to the greater of (a) 101% of the then
effective liquidation preference and (b) the then market value of the
Ordinary Shares into which the Participating Shares are convertible, in each
-15-
<PAGE>
case plus accumulated and unpaid dividends accruing from the most recent
dividend payment date. In the event of a change of control event which takes
place within three and a half years from the initial issue date of the
Participating Shares, the holders of the Participating Shares are also
entitled to receive any other dividend payments that would otherwise have
been payable on the Participating Shares up to and including the date which
is three and a half years following the initial issue date had they not been
redeemed. As an alternative to redemption of the Participating Shares at the
"as converted" ordinary share value, the Company may decide instead to
convert the Participating Shares, instead of redemption in cash, into the
number of Ordinary Shares into which they are convertible. Alternatively,
the holders of Participating Shares may elect to convert all or part of their
Participating Shares into Ordinary Shares and, if the change of control event
takes place within three and a half years from the initial issue date of the
Participating Shares, on conversion, the holders of the Participating Shares
will also receive a cash payment equal to the amount of any dividend payments
that would otherwise have been payable on the Participating Shares up to and
including the date which is three and a half years following the initial
issue date.
The following constitute change of control events:
(i) any person or group of persons (other than The Cypress
Group LLC and any of its affiliates) becomes the
beneficial owner of more than 29.99% of the Company's
voting shares;
(ii) subject to certain exceptions, the Company merges or
consolidates with another entity, petitions the court
pursuant to a scheme of arrangement within the meaning of
section 425 of the United Kingdom Companies Act 1985 or
transfers all or substantially all of its assets to
another person, in any such event pursuant to a
transaction in which the issued voting shares of the
Company are changed into or exchanged for cash,
securities or other property, subject to specified
exceptions;
(iii) during a period of 24 consecutive months, individuals who
at the beginning of the period constituted the Board of
Directors (together with any new members of the Board of
Directors whose election is approved by a vote of at
least 66 2/3% of the Board of Directors then still in
office who were either directors of the Board of
Directors at the beginning of the period or whose
election was so approved) cease to constitute a majority
of the Board of Directors; and
-16-
<PAGE>
(iv) subject to certain exceptions, the Company is voluntarily
or involuntarily wound up or adopts a plan of
liquidation.
In the event that the Company is unable to redeem Participating Shares
on the due date for redemption following a change of control event, the
liquidation preference of each Participating Share, and therefore, the amount
of the dividends payable on each Participating Share and their liquidation
preference will be increased in accordance with the formula set forth in the
new articles of association. The formula increases the liquidation
preference per Participating Share by an amount (if a positive number only)
equal to (i) the difference between (a) 101% of the effective liquidation
preference per share on the due date for redemption and (b) the aggregate
market value of the Ordinary Shares into which each Participating Share is
convertible on the date immediately preceding the first public announcement
of the transaction giving rise to the change of control event, multiplied by
(ii) a fraction the numerator of which is the deficiency in monies lawfully
available for redemption of the Participating Shares due to be redeemed
following the change of control event and the denominator of which is the
total amount of monies necessary to pay the total redemption price that would
be payable on the change of control event if all of the Participating Shares
then in issue were to be redeemed.
The Subscription Agreement provides for the reciprocal indemnification
between the Company, on the one hand, and the Investors, on the other hand,
for breaches of representations and warranties and breaches of covenants,
subject to certain exceptions set forth in the Subscription Agreement.
The Company paid affiliates of the Investors a commission of $4,000,000
upon completion of the sale of the Participating Shares.
Danka Holding Company and Danka Office Imaging Company (which are U.S.
subsidiaries of the Company) have agreed to pay the out-of-pocket expenses of
the Investors incurred in connection with the sale of the Participating
Shares (including, without limitation, the fees of the Investors' legal
advisors, financial advisors and accountants).
Registration Rights Agreement
Pursuant to a Registration Rights Agreement, the Company has granted the
Investors demand registration rights with respect to their Participating
Shares, Ordinary Shares into which such Participating Shares are convertible
and American Depositary Shares representing such Ordinary Shares. The Company
is required to pay all registration expenses, subject to limitations
contained in the Registration Rights Agreement. In addition, the Investors
have "piggyback" registration and listing rights with respect to those
-17-
<PAGE>
securities, subject to reduction by the managing underwriter of that
offering, if any marketing factors so require.
Demand Registrations. At any time after December 17, 2000, each
Investor (or persons to whom an Investor specifically assigns the right) will
have the right to require the Company to file a registration statement under
the U.S. Securities Act covering all or part of its securities. The Company
will then give the other holders of Participating Shares (or holders of
Ordinary Shares or American Depositary Shares into which Participating Shares
are converted) the opportunity to participate in the registration. The
holders are permitted a maximum of four demand registrations.
Piggyback Registrations. At any time after December 17, 2000, if the
Company proposes or is required by law to register shares of its capital
stock under the U.S. Securities Act or to list any shares on the London Stock
Exchange, with certain exceptions, the Company shall give reasonable notice
of its intention to do so to each of the holders of Participating Shares (or
holders of Ordinary Shares or American Depositary into which Participating
Shares are converted) and provide them with an opportunity to participate in
the registration statement or the listing, as applicable. There is no
limitation on the number of piggyback registrations or piggyback listings.
Indemnification and Contribution. With respect to the registration of
securities pursuant to the Registration Rights Agreement, the Company will
indemnify each Investor selling securities covered by the registration
statement, and persons who participate as underwriters in such sales, against
all claims and expenses to which such person may become liable based on
untrue statements of material fact, or failure to state a material fact,
contained in the registration statement or the prospectus and any amendments
or supplements to such documents, except to the extent such claims or
expenses arise from reliance upon information furnished to the Company by the
indemnified party. In addition, each Investor selling securities that are
included in the registration statement will severally, and not jointly,
indemnify the Company with respect to any untrue statement of material fact
in, or omission of any material fact from, such registration statement or any
accompanying prospectus and any amendments or supplements to such documents,
if such claims or expenses arise from reliance upon information furnished by
such Investors to the Company. However, in no event will the Investors
indemnify the Company in an amount greater than the net proceeds received by
such Investors upon the sale of securities pursuant to the registration
statement giving rise to the claim.
Contribution. If for any reason the indemnity provided in the
Registration Rights Agreement is unavailable or is insufficient to hold
harmless an indemnified person, then the Company, the shareholders and the
underwriters of the registration statement giving rise to a claim, may seek
-18-
<PAGE>
contribution from one another in proportion to the relative benefits and
relative fault of each such person to the others.
Except as set forth in this Statement, none of the Reporting Persons has
any contracts, arrangements, understandings or relationships (legal or
otherwise) with any person with respect to any securities of the Company,
including but not limited to, transfer or voting of any of the securities of
the Company, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies, or a pledge or contingency the occurrence of which
would give another person voting power over the securities of the Company.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement
2. Powers of Attorney
3. Subscription Agreement (The Subscription Agreement, filed as
Exhibit 99.1 to the Company's Current Report on Form 8-K dated
November 5, 1999, is hereby incorporated herein by reference).
4. Amendment to Subscription Agreement (The Amendment, filed as
Exhibit 2 to the Company's Current Report on Form 8-K dated
December 20, 1999, is hereby incorporated herein by reference).
5. Registration Rights Agreement (The Registration Rights Agreement,
filed as Exhibit 3 to the Company's Current Report on Form 8-K
dated December 20, 1999, is hereby incorporated herein by
reference).
6. Amended Articles of Association of the Company (The Amended
Articles of Association, filed as Exhibit A to the Company's
Definitive Proxy Statement on Schedule 14A dated November 24,
1999 is hereby incorporated herein by reference).
-19-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
CYPRESS ASSOCIATES II LLC
By: /s/ Jeffrey P. Hughes
----------------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
CYPRESS MERCHANT BANKING PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By: /s/ Jeffrey P. Hughes
----------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
CYPRESS MERCHANT BANKING II C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By: /s/ Jeffrey P. Hughes
---------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
55th STREET PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By: /s/ Jeffrey P. Hughes
---------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
/s/ Jeffrey P. Hughes
----------------------------------
JEFFREY P. HUGHES*
/s/ Jeffrey P. Hughes
---------------------------------
JAMES A. STERN*
/s/ Jeffrey P. Hughes
----------------------------------
JAMES L. SINGLETON*
-20-
<PAGE>
/s/ Jeffrey P. Hughes
----------------------------------
DAVID P. SPALDING*
* By: Jeffrey P. Hughes
Title: Attorney-in-Fact
Dated: December 23, 1999
-21-
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) of the Securities Exchange Act of 1934, as
amended, the undersigned hereby agree to the joint filing on behalf of each
of us of a statement on Schedule 13D relating to the Ordinary Shares, nominal
value 1.25 pence per share, of Danka Business Systems PLC, a limited
liability company organized and existing under the laws of England and Wales,
and that any amendments thereto filed by any of us will be filed on behalf of
each of us. This Agreement may be included as an exhibit to such joint
filing.
CYPRESS ASSOCIATES II LLC
By: /s/ Jeffrey P. Hughes
---------------------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
CYPRESS MERCHANT BANKING PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By: /s/ Jeffrey P. Hughes
---------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
CYPRESS MERCHANT BANKING II C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By: /s/ Jeffrey P. Hughes
---------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
55th STREET PARTNERS II L.P.
By: Cypress Associates II LLC, its
Managing General Partner
By: /s/ Jeffrey P. Hughes
---------------------------
Name: Jeffrey P. Hughes
Title: Managing Member
-23-
<PAGE>
/s/ Jeffrey P. Hughes
---------------------------------
JAMES A. STERN*
/s/ Jeffrey P. Hughes
----------------------------------
JEFFREY P. HUGHES*
/s/ Jeffrey P. Hughes
----------------------------------
JAMES L. SINGLETON*
/s/ Jeffrey P. Hughes
----------------------------------
DAVID P. SPALDING*
Dated: December 23, 1999 * By: Jeffrey P. Hughes
Title: Attorney-in-fact
-24-
<PAGE>
EXHIBIT 2
POWER OF ATTORNEY
Know all men by these presents that each of the undersigned (each,
a "Grantor") does hereby make, constitute and appoint each of the other
undersigned, with power and authority to act individually, as true and lawful
attorneys-in-fact of such Grantor with full powers of substitution and
revocation, for and in the name, place and stead of such Grantor (both in
such Grantor's individual capacity and as a member or other authorized
representative of any limited liability company or partner or other
authorized representative of any partnership for which such Grantor is
otherwise authorized to sign), to execute and deliver such forms as may be
required to be filed from time to time with the Securities and Exchange
Commission with respect to any investments of Cypress Merchant Banking
Partners II L.P., Cypress Merchant Banking II C.V., or 55th Street Partners
II L.P. or their affiliates (including any amendments or supplements to any
reports or schedules previously filed by such persons or entities)
(i) pursuant to Sections 13(d) and 16(a) of the Securities Exchange Act of
1934, as amended, including without limitation Schedules 13D and statements
on Form 3, Form 4 and Form 5 and (ii) in connection with an application for
EDGAR access codes, including without limitation on Form ID.
/s/ James A. Stern
---------------------
JAMES A. STERN
/s/ Jeffrey P. Hughes
---------------------
JEFFREY P. HUGHES
/s/ James L. Singleton
---------------------
JAMES L. SINGLETON
/s/ David P. Spalding
----------------------
DAVID P. SPALDING
December 17, 1999
-25-
